evaluationseries
3.1 Increasing cost
efficiency & productivity –
on-farm
2.6 Aggressive promotion
in the market place
Building the
Australian prime
lamb industry
The industry impact
Meat & Livestock Australia acknowledges the matching funds provided by the Australian Government to support the research and development detailed in this publication.
PROMISE
A domestic and export lamb industry with
a combined value of at least $2 billion by
20001 and $2.8 billion by 20052.
DEFINITIONS
Lamb Female, castrate or entire male ovine aged up to 12 months
with no permanent incisor teeth.
Southern sheep and lamb producers Farmers from New South
Wales, Victoria, South Australia, southern Western Australia and
Tasmania who produce sheep or lambs for the red meat industry.
Benefit:Cost Ratio (BCR) Total project benefits divided by total costs.
The BCR for agricultural R&D projects is typically in the range 1.5 to 5.
Internal Rate of Return (IRR) The discount rate that makes the net
present value equal zero. Can also be the rate of growth the project is
expected to generate.
Meat Research Corporation (MRC) The MRC (1991-98) evolved
from the Australian Meat & Livestock RDC (1985-91) and its
predecessor, the Australian Meat Research Committee (1966-85).
Prime Lamb Key Program In the early 1990s MRC collaborated
with state departments of primary industry (DPIs) and established the
Prime Lamb Key Program to increase industry capacity to produce
large, lean lambs. The Program introduced the RD&E framework on
which MLA’s lamb and sheepmeat industry program is built.
Lamb Consistency Key Program An MLA program that followed
on from the Prime Lamb Program and aimed to improve lamb
consistency across Australia’s various lamb producing states.
Industry Collaborative Agreements (ICAs) ICAs are 50:50 funding
arrangements between individual processors and MLA for export
marketing and represent an ongoing litmus test that indicates where
exporters see their best return on investment occurring.
Australian Meat and Live-Stock Corporation (AMLC) Meat
marketing body the AMLC merged with the MRC to form MLA
following the meat industry restructure in 1998.
Sheepmeat Council of Australia Inc (SCA) The peak national
body representing and promoting the interests of lamb and sheepmeat
producers in Australia.
BACKGROUND
Meat & Livestock Australia (MLA), as the service provider to the
Australian red meat industry, strives to build demand, improve access
to global markets, develop a competitive advantage from ‘paddock to
plate’ and, by partnering with industry, build capability.
Remaining accountable to stakeholders and providing quantifiable
returns on government and industry investment are central to
demonstrating performance against these goals.
In 2005 MLA engaged the Centre for International Economics (CIE) to
conduct an independent review, and to develop an effective evaluation
framework* for assessing the impact of its programs and their
compliance with government priorities.
The framework provides independent estimates of the net benefits of
MLA programs – including achievements relative to targets and industry
benefits relative to a situation where the MLA program did not exist.
It also provides for interactions between the meat and livestock
sectors and wider Australian economy, allowing national benefits
to be measured. These benefits are not only economic, but also
environmental and social, thereby supporting a rigorous triple bottom
line evaluation of MLA initiatives.
Where we started
In the late 1980s lamb attracted low auction prices, with fluctuating
quality and an ‘old fashioned’ image labelling it an inferior choice to
skinless chicken breast fillets and ‘New Fashioned Pork’. By 1990
the lamb industry was valued at $1.1 billion and 85 per cent of its
product was consumed by the domestic market.3
Two decades ago lamb was primarily a wool industry by-product:
production was dominated by very seasonal supply and domestic
market requirements, with per capita consumption declining rapidly
at five per cent per year4. Consumer tracking studies showed
that lamb was losing ground with younger consumers due to its
perceived fattiness, wastage, lack of versatility and difficulty to cook.
Meanwhile, in the United States (US) a weakened domestic lamb
industry and restrictions on export competitors such as New
Zealand provided lucrative opportunities for the Australian industry.
A strategic response
Industry leadership and collaboration
The 1995 Lamb Industry Strategic Plan (LISP) facilitated by the Meat
Research Corporation (MRC) and the Sheepmeat Council of Australia
(SCA) established high-level goals targeting an industry value of $2
billion per year by 2000. The subsequent industry revolution was
market driven and underpinned by a program to identify, promote and
create supply pathways for what consumers wanted, and an on-farm
research and development (R&D) program focused on delivering it.
MLA collaborated with the SCA and key industry players to
execute R&D and marketing programs that facilitated cooperation
and co-investment through the supply chain involving producers,
processors, independent retailers and supermarkets. The federal
and state governments’ critical financial contribution saw state
DPI extension staff and research institutions play a pivotal role in
building industry capability. This collaboration has underpinned
reported industry benefits.
* MLA’s evaluation framework is explained in full in the booklet, Why does MLA
need a framework for independent evaluation?, that accompanies the MLA
program evaluation series.
REINVENT THE
PRODUCT
All benefit-cost ratios in this report come from the MLA program evaluation
framework unless otherwise stated. The figures in this report represent the net
present value of industry value added between 1990 and 2015 and are based on
the MLA global meat industry model (CIE).
Evaluations completed: 1.1 Enhancing product integrity; 1.2 Maintaining and
liberalising access to world meat markets; 2.1 Improving eating quality;
2.2 Enhancing the nutritional reputation of red meat.
ABN 39 081 678 364
October 2009
© Meat & Livestock Australia (2009)
ISBN 9781741913347
www.mla.com.au
2
Disclaimer: Where possible care is taken to ensure
the accuracy of the information contained in this
publication.
However MLA cannot accept responsibility for the
accuracy or completeness of the information or
opinions contained in the publication. You should
make your own enquiries before making decisions
concerning your interests.
Reproduction in whole or part of this publication is
prohibited without prior consent and acknowledgment
of Meat & Livestock Australia.
$2.8 billion by 2005
• Larger, leaner lambs
(on-farm R&D)
• Prime Time
(specialist prime lamb
industry)
• Trim Lamb
(domestic marketing)
1
REINVIGORATE THE
DOMESTIC MARKET
$2 billion by 2000
• FARL
(US marketing)
Information in this brochure is based on the CIE reports: An Evaluation of Lamb
On-farm Programs and An Evaluation of Domestic and US lamb Marketing (2008).
GROW
MARKETS
• FAPL Easy. Any Day.
(US marketing)
• We Love Our Lamb
(domestic marketing)
Lamb Industry Strategic Plan (LISP) benchmark
Lange Analysis P/L (value estimate is a sum of the following market segments: retail
in Australia; foodservice in Australia; export markets for lamb (including offal); export
markets for live lamb; a selected co-product – lamb skins)
2
3
MLA
Fogarty, N 2008, NSW Department of Primary Industries Interview, 14th April 2008,
viewed online at www.dpi.nsw.gov.au
4
MEAT & LIVESTOCK AUSTRALIA
PROGRESS
PERFORMANCE
Changing consumer and industry attitudes
and behaviours; increased demand for
lamb products; broad industry participation
in extension activities; widespread
adoption of information and tools, and
on-farm implementation of R&D outcomes.
The $639 million† invested by MRC, AMLC
and MLA between 1991 and 2007 has had
a positive influence on lamb production,
industry and consumer attitudes, contributing
to increased turn-off of larger, leaner
carcases; increased consumer demand;
higher returns; and $1.39 to $2.39 billion† in
industry value added at the farm gate.††
What we did
What we’ve achieved
REACHING $2 BILLION BY 2000
An independent review by CIE showed that activities conducted
under MLA’s on-farm lamb R&D and marketing programs
contributed to a significant reversal in industry and consumer
attitudes, transforming lamb from discount commodity to
aspirational product and valuable export.
Larger, leaner lambs
US consumer research led early 1990s on-farm research targeting
larger, leaner lambs. Workshops and collaborative programs built
producer capability; encouraged adoption of new tools; improved
understanding of market needs; and drove participation in supply
chain alliances and value-based marketing.
FARL
Efforts of the Australian Meat and Live-Stock Corporation (AMLC) and
key Australian exporters to implement the ‘Fresh Australian Range
Lamb’ (FARL) program generated US importer and retailer confidence
that Australia could guarantee production to strict specifications.
It established lamb as a premium quality product in the US. MLA
cooperated with government and industry to liberalise access to
international markets including the US (see evaluation brochure 1.2
Maintaining and liberalising access to world meat markets).
Trim Lamb
Concurrent efforts to reinvent lamb for the domestic market
included a move towards dedicated lamb processing plants; and
butcher education to extract more value from larger carcases and
develop leaner, more sophisticated and versatile cuts.
The LISP aspired to achieve a lamb industry valued at $2 billion by
2000 and $2.8 billion by 2005.1 The 2000 target was not achieved
until 2003, however both LISP targets were surpassed in 2007
with annual industry sales valued at approximately $2.9 billion
($2.1 billion and $820 million in the domestic and export markets
respectively)2. (The industry’s environmental performance is not
evaluated in this brochure – see 3.4 Ensuring sustainability for more
information.)
In this report the estimated added industry value is conservative
because generous assumptions for increasing lamb slaughter
numbers and carcass weights are used in the without investment
scenario. The benefit-cost ratios are calculated at the farm gate
level and do not account for the added industry value post farm
gate. To illustrate this point, in 2007 annual industry sales were
valued at approximately $2.9 billion where the farm gate industry
value was $1.5 billion.
FAST FINANCIAL FACTS†
Aggressive promotion under the ‘Trim Lamb’ campaign, which
aimed to reposition lamb as a modern meat, involved the
development of 22 new cuts and collaboration with retailers to
improve merchandising.
Total MLA investment*
n Total investment from 1991 to 2007: $639 million**
n Marketing = $383 million
Eating quality improvements and research reinforcing meat’s
nutritional reputation encouraged value-adding and heightened
retail marketing (see evaluation brochures 2.1 Improving eating
quality and 2.2 Enhancing the nutritional reputation of red meat).
n
Research = $256 million (including $128 million in
matching Australian Government contributions)
n
Total industry value added over 25 years***:
$1.39 - $2.39 billion at the farm gate
n Marketing = $860 million - $1.43 billion
REACHING $2.8 BILLION BY 2005
n Research = $530 - $955 million
Prime Time
n Total MLA internal rate of return: 16-26%
The ‘Prime Time’ campaign, launched in 2003, empowered producers
to take advantage of proven breeding, feeding and management
research and technologies to improve industry efficiency.
n Total MLA benefit-cost ratio: 2.2-3.7:1
The Australian lamb industry revolution was
Easy. Any Day.
In 2000 FARL was replaced by the ‘Fresh Australian Premium Lamb’
(FAPL) brand, which established lamb as a ‘special occasion’ meal.
In 2005 MLA repositioned lamb to appeal to a broader consumer
base with the ‘Easy. Any Day.’ campaign and ‘Australian Lamb’
logo. Industry collaborative agreements (ICAs) were instrumental in
enhancing generic and private brand lamb promotion in the US.
We Love Our Lamb
While the ‘Trim Lamb’ initiative transformed the product on offer to
consumers, a new challenge to modernise lamb became apparent.
From 1999, MLA re-focused on mainstream cuts to rekindle lamb’s
appeal among families and the subsequent ‘We Love Our Lamb’
campaign positioned lamb as Australia’s national meat.
MEAT & LIVESTOCK AUSTRALIA
driven by a major marketing program to
identify, promote and create supply pathways
for what consumers wanted, and an on-farm
R&D program focused on delivering it.
Sheepmeat Council of Australia Inc, McIntyre, R., MLA December 1998,
Strategically Positioning the Australian Sheepmeat Industry for the Year 2005,
Sheepmeat Council of Australia
1
ABS, DAFF
2
†
All results are net present values in 2007 dollars
††
If the investment of other industry stakeholders is accounted for, the added value of
all industry efforts is $4.78 billion at the farm gate level.
* The MLA investment comprises producer levies for marketing and research with the
latter matched by the Australian Government on a dollar-for-dollar basis
** Excludes investment for market access, nutrition, eating quality and sustainability
*** 1990-2015: high and low net present values based on assumptions and sensitivity
analysis on page 4
3
INDUSTRY LEADERSHIP AND COLLABORATION
n $128 million in matching Australian
Government funds leveraged under the
Australian Rural Research and Development
Corporation model created a competitive
advantage for Australia in the global economy.
n Co-investment by industry and the
Australian Government secured a further
$225 million contribution by state DPIs to
the lamb industry turnaround.
Integrated marketing and
innovation
Close integration between demand and supply activities has
been critical to the lamb industry’s transformation. An on-farm
production shift away from light lambs towards large, lean lambs
and development of a professional lamb production sector was
largely precipitated by the wool industry decline, but was also
driven by demand developments including the new consumer
trend favouring leaner lamb.
Neither demand nor supply activities alone would have achieved
the reported results. Promotion of lean lamb would not have had
an impact without supply developments that influenced product
transformation, and supply transformation would not have
produced a significant impact without demand developments.
Key assumption around attribution
of total benefits 1990–2015
Promotion
60%
Continuous marketing commitment
Supply development
40%
TABLE 1
TABLE 1
MLA/AMLC
Industry &
matching
others
programs
MLA/AMLC
matching
programs
The industry’s successful turnaround is testament to the continuous
marketing investment by industry through AMLC, MLA and private
companies. MLA marketing programs in Australia and overseas
have refocused in response to changing consumer requirements,
emphasising the need to reinvest in new approaches.
TABLE 2
Industry &
others
MLA/MRC
programs
Industry &
others
DPI
Industry and others (promotion) = A range of infrastructure/relationship-building
activities by importers and exporters, supermarkets, butchers, SCA, Australian Meat
Industry Council (AMIC), other MLA/AMLC programs (Eating Quality, Food Safety
TABLE
1. SENSITIVITY
ON ATTRIBUTION
and Market
Access) andANALYSIS
external factors
Sensitivity analyses
Key assumption around attribution
FOR
DOMESTIC
& US PROMOTION
ofIndustry
total
benefits
1990–2015
and others (supply development) = CSIRO, CRCs, other state DPI programs
MLA/AMLC
and external
factors
Industry & others
BCR†
40%
60%
3.0
30% Promotion
70%
Source: The CIE
Total benefits of turnaround in lamb industry
3.7
performance 50%
$1.39 - $2.39 billion
60%
2.2
Supply development
40%
TABLE 2. SENSITIVITY ANALYSIS ON ATTRIBUTION
FOR LAMB SUPPLY DEVELOPMENT
Domestic
marketing
MLA/MRC
42%
MLA/AMLC
matching
28%
programs
MLA has a national, whole-of-supply chain focus incorporating
supply and demand industry interests. In partnership with the
Sheepmeat Council of Australia, it takes a lead role in scoping,
implementing and evaluating on-farm R&D through consultation
with the sheep industry, federal and state governments, and
research organisations.
Total benefits of turnaround in lamb industry
performance $1.39 - $2.39 billion
US
marketing
50%
Leveraging co-investment with Departments
of Primary Industry
MLA’s cooperation with state departments of primary industry
(DPIs) on lamb R&D projects and extension of results to
producers have been critical to the positive outcomes reported.
Domestic
marketing
50%
However, the benefit: cost ratio methodology requires an estimate
for the attribution of benefit between suply and demand activity.
The markert-led transformation of the lamb industry supports an
estimated 60:40 split in favour of promtion (see flow chart).
TABLE 1
DPI
40%
US
Industry &
marketing
TABLE 1
33%
MLA/AMLC
Industry &
matching
others 22%
programs
others
MLA/MRC
BCR*
10%
3.7
25%
3.1
Industry &
50%
others
TABLE 2
MLA/MRC
programs2.1
DPI
BCR††
3.4
2.8
DPI
Industry &
1.9
others
Attribution of benefits – a key challenge
Developing new products and markets for Australian lamb requires
a team approach with various stakeholders’ cooperation. Industry
organisations’ investment in business development; marketing and
promotion; and research and development is reflected in the annual
budgets, however the contribution of industry and others in the
form of in-kind marketing, infrastructure investment and other costs
is more difficult to measure. Therefore, attributing the economic
benefit of developments in the Australian lamb industry to individual
stakeholders is fraught with difficulties. In order to maintain
transparency and credibility in the attribution process, a sensitivity
analysis (see tables 1 & 2) was employed to identify the range of
economic benefit arising from co-investment by MLA/ AMLC/ MRC
and DPIs. This approach is better than calculating an absolute
figure which would rely too heavily on multiple assumptions.
Industry and others (promotion) = A range of infrastructure/relationship-building
activities by importers and exporters, supermarkets, butchers, SCA, Australian Meat
Industry Council (AMIC), other MLA/AMLC programs (Eating Quality, Food Safety
and Market Access) and external factors
Industry and others (supply development) = CSIRO, CRCs, other state DPI programs
and external factors
Source: The CIE
†
See range in Fast Finacial Facts on page 3
††
4
See range in Fast Finacial Facts on page 5
MEAT & LIVESTOCK AUSTRALIA
REINVENT THE PRODUCT
n The $256 million invested by MRC and
MLA between 1991 and 2007 has had a
positive influence on the productivity and
efficiency of lamb production, contributing to
increased turn-off of larger, leaner carcases;
consistent supply; and development of
a specialist prime lamb industry. Lamb’s
‘reinvention’ has generated an additional
$955 million in industry value added.†
REINVENT THE PRODUCT
Lamb’s reinvention was
dependent on identifying
opportunities to deliver
practical R&D tools and
information to producers
through effective channels.
GROW MARKETS
REINVIGORATE THE DOMESTIC MARKET
Reaching $2 billion by 2000
Reaching $2.8 billion by 2005
• Larger, leaner lambs
• Specialist prime lamb industry
GENETICS
Breeding: LAMBPLAN®/Merino Genetic Services
(later MERINOSELECT®); Prime Lamb Key Program
– heavier carcases, leaner lambs, 5% p/a productivity growth
HEALTH AND REPRODUCTION
Reproduction: Sheep Genomics Program; EverGraze®
– increased lamb marking rate and turn-off;
increasing consistency of year-round lamb supply
Reproduction: Maternal Central Progeny Test; Management Solutions
– increased lamb marking rate and turn-off;
increasing consistency of year-round lamb supply
Sheep health: parasite control agents; registered ovine Johne’s
disease vaccine (OJD)
– capacity to reduce OJD deaths by up to 90%
SHEEP NUTRITION – THE FEEDBASE
Nutrition: Prograze®; Grain & Graze®; EverGraze®
– increased profitability; improved sustainability and climate risk
management
Nutrition: Sustainable Grazing Systems; Prime Lamb Key Program
– capacity to increase profitability and sustainability
ON-FARM MANAGEMENT AND ADOPTION
Value-based marketing: Prime Lamb Key Program;
Lamb Consistency Key Program
– higher proportion of lambs meet market specifications
Professionalism: Prime Time campaign
– 13% increase in estimated lamb numbers;
up to 25% increase in expected lamb sales
Sheep management and adoption: EDGEnetwork®
– 4-5% increase in short-term productivity;
forecast profitability increases up to 12%
FAST FINANCIAL FACTS†
Total MLA on-farm investment
nT
otal investment 1991 to 2007: $256 million (including
Australian Government funding)
nT
otal industry value added over 25 years*:
$531 - $955 million at the farm gate
nB
enefit-cost ratio: 2.1-3.7:1
Producer adoption of R&D outcomes and
industry capability development was dependent
on four fundamental principles
• Appreciating
the needs
of different
industry
segments
Total DPI on-farm investment
nT
otal investment 1991 to 2007: $225 million
n
State breakdown of investment
n SA 6%
n NSW 24%
n VIC 48%
n TAS 2.5%
nW
A 18%
n QLD 1.5%
nT
otal industry value added over 25 years*:
$424 - $764 million at the farm gate
nB
enefit-cost ratio: 1.9-3.4:1
Total MLA/DPI on-farm investment
nT
otal investment to 2007: $481 million
nT
otal industry value added over 25 years*:
$955 million - $1.7 billion at the farm gate
nB
enefit-cost ratio: 2.0-3.6:1
• Identifying
opportunities
to deliver
practical R&D
tools and
information
through
effective
channels
• Building
• Demonstrating
industry
the
capability to
commercial
understand
benefits
and implement
of new
best practices
technologies
and systems
to stimulate
uptake
Benefits from on-farm investment in
lamb supply (net present value 2007)
Total investment
$481m
Total industry value added
over 25 years*
$1.71b
0
500
MLA on-farm investment
†
All results are net present values in 2007 dollars
1,000
Total ($m)
1,500
2,000
DPI on-farm investment
Source: CIE
* 1990-2015: high and low net present values based on assumptions and sensitivity
analysis on page 4
MEAT & LIVESTOCK AUSTRALIA
5
SHEEP GENETICS
n Since the LAMBPLAN® genetic evaluation
technology was introduced, a higher percentage
of lambs have reached target market
specifications.
n Use of MERINOSELECT® has increased the
rate of genetic progress in Merinos by about 10
per cent of average gross margins per year.
“A really good ram only comes
along every so often and through
LAMBPLAN® we can find those superior
rams from an early age. Measured
genetics allow producers to know what
they are buying and to produce to
market specification.”
– George Carter, Linton Stud seedstock producer, NSW
Sheep genetics
REACHING $2 BILLION BY 2000
MLA’s investment in sheep genetics encompasses scientific
capacity building; delivery of genetic improvement tools to
producers; and genetic evaluation technologies including
LAMBPLAN® and MERINOSELECT® – a joint MLA/Australian
Wool Innovation (AWI) initiative. The combined MLA/AWI Sheep
Genomics Program is another major collaborative project
designed to identify sheep genes for improved animal health,
welfare and productivity.
LAMBPLAN®
Merino Genetic Services (MERINOSELECT®)
Established as Meatsheep Testing Services by the NSW
Department of Primary Industries in 1980, the system became
the national LAMBPLAN® project in 1989 with industry support.
It was handed to the MRC in 1992 to facilitate commercialisation
and industry ownership and MLA has continued that role.
From 1994, Merino Genetic Services provided Merino breeders and
producers with information on the genetic potential of sheep through
ASBVs, enabling them to select the best sire or dam for their breeding
objectives across a range of commercial production and quality traits.
LAMBPLAN ’s key outputs are Australian Sheep Breeding Values
(ASBVs), which are calculated based on comparison with relatives
and other animals. ASBVs predict individual animals’ ability to
produce progeny that meet market specifications.
®
Investment:
n
LAMBPLAN /MERINOSELECT – $350,000 per year on
average*
®
®
nS
upporting R&D – $1 million per year on average
Outputs: LAMBPLAN® genetics information and ASBV evaluation
system
Outcomes:
n7
0 per cent of terminal sire breed rams bought by commercial
producers come from flocks that use LAMBPLAN®
n
All major terminal, maternal and dual-purpose breeds in
Australia use LAMBPLAN®
Impacts:
n
Higher percentage (66 per cent) of lambs reach target market
specifications
n
Heavier carcase weights and leaner lambs (carcase weight is
increasing by 0.25kg per year with almost no change in fat and
bone as a result of genetic changes facilitated by LAMBPLAN®
– see chart opposite)
MERINOSELECT® replaced Merino Genetic Services with the
formation of Sheep Genetics Australia in 2005 – a joint venture with
AWI which provides a platform for standardisation, calculation and
use of credible breeding information across all industry sectors.
Investment: See LAMBPLAN® investment
Outputs: MERINOSELECT® genetics information and
evaluation system
Outcomes:
n
Merino breeders and producers have access to credible,
accurate breeding information
n
Approximately 25 to 30 per cent of Merino rams entering
industry have MERINOSELECT® information and this proportion
is growing
n
Ram buyers are paying significant premiums to purchase
Merino rams with ASBVs1
Impacts:
n
The rate of genetic progress in Merinos has increased
significantly since 2000 and is now running at about 10 per
cent of average gross margins per ewe per year1
Standardised trends in growth, fat and muscle
3.0
Average index value (kg)
2.5
nH
igher crossbred ewe lambing rate and improved second-cross
lamb carcase merit
2.0
nS
ignificantly higher prime lamb productivity growth (about five
per cent per year) compared with the overall sheep population1
1.0
1.5
0.5
0.0
–0.5
1
arris, J & Ryce, C 2005, Outcomes of MLA’s livestock production research
H
and development, MLA
* MLA investment only (nominal dollars)
6
97
98
99
00
01
02
03
04
05
06
07
Year of birth
Growth
Fat
Muscle
Source: Sheep Genetics, 2008
MEAT & LIVESTOCK AUSTRALIA
SHEEP REPRODUCTION AND HEALTH
A registered vaccine
reducing OJD
deaths by up to
90 per cent was
a major output
of the National
OJD Program
coordinated by
n A technology platform has been developed to
pave the way for new parasite control agents.
n Investments across a range of projects have
resulted in improved genetic use and nutrition
to achieve the capacity to maintain lamb supply
during extended drought and increase lamb
turn-off despite a declining flock.
MLA.
Sheep reproduction
Sheep health
REACHING $2 BILLION BY 2000 AND
$2.8 BILLION BY 2005
REACHING $2.8 BILLION BY 2005
Reproduction
From 1991 to 2007, MLA and its predecessors invested in R&D
to equip producers to manage and improve lamb marking rates
and ewe reproductive capacity. Specific outputs for the period
1990 to 1995 included genetic evaluation tools delivered through
LAMBPLAN®; a Maternal Central Progeny Test to measure genetic
variation in lambing rates; Management Solutions projects to
explore genetics and grazing system interactions; and knowledge
to develop superior ewe genetics using new perennial pasture
systems under the EverGraze® initiative.
As few projects have focused on breeding alone, the investment
summary below overestimates actual amounts specific to
reproduction. However, evaluation indicates work in this field has
helped producers to use genetics and ewe nutrition to achieve
marking rate targets, and to make more informed choices. Not
all producers or regions pursued an increased marking rate,
reflecting local and individual preferences regarding optimal
lambing times, the wool-meat balance, and supplementary feed
and improved grazing management costs.
Investment:
n
Maternal Central Progeny Test – $750,000 over seven years*
n
Management Solutions projects (Morelamb, LambMax and
others) – $2 million over five years*
n
EverGraze® – $2.5 million over five years*
n
Sheep Genomics Program (refer p6), Maternal Temperament
program, EDGEnetwork® courses and tools, Prime Time
campaign (refer p9) – total investment $3.5 million*
MLA’s investment in animal health research has focused on
internal parasite control; disease prevention and management;
and nutritional/integrated management practices.
Parasites
Many internal parasites are costly to sheep production but
resistant to drugs. MLA and AWI launched a research program
in 2002 to create commercially available sheep worm control
technologies to address this issue. Projects have employed
leading biochemical, genomic and proteomic technologies to
investigate the most economically damaging parasites and their
interface with the host.
Investment: $4 million joint MLA/AWI investment over four years
Outputs: Knowledge of potential new parasite control targets
Outcomes: A technology platform for further applications in
genomics and post-genomics of globally significant pathogens
Impacts: Dependent on co-investment with pharmaceutical
companies to further develop new parasite control agents
Ovine Johne’s disease (OJD)
Since 1998, MLA has provided critical overall coordination of the
National OJD Program.
OJD is caused by bacteria that infect the intestinal wall and
can result in death. The annual cost to Australian producers is
estimated at $53 million.
Investment: Total $19 million joint investment with Animal Health
Australia (AHA), the Australian Government and research partners,
including a $2.5 million MLA contribution
Outputs:
Outputs:
n
Registered OJD vaccine
n
ASBVs for various reproductive traits
n
Livestock movement recommendations
n
Best-practice guides, training courses and on-farm tools
(eg Weaner Planner)
n
Grazing management strategies
Outcomes:
n
Steady genetic progress in weaning rate of major maternal
breeds
n
Improved producer capacity to manage weaning rate
n
More precise management of ewe nutrition throughout the
reproductive cycle
n
OJD on-farm management guides
Outcomes:
n
Capacity to reduce OJD deaths by up to 90 per cent
n
Capacity to reduce pasture contamination
n
Disease control
n
Improved understanding and management of OJD
Impacts:
Impacts:
n
Genetic improvement in lamb marking rate
n
Increased trading options
n
Increased lamb turn-off in the face of a declining ewe flock
n
Mitigated economic loss (estimated at $7.68 per dry sheep
equivalent (DSE))1
n
Capacity to maintain lamb supply during extended drought
n
Capacity to increase lamb turn-off in favourable seasons
1
Harris, J & Ryce, C 2005, Outcomes of MLA’s livestock production research
and development, MLA
* MLA investment only (nominal dollars)
MEAT & LIVESTOCK AUSTRALIA
7
SHEEP NUTRITION – THE FEEDBASE
n More than 80 per cent of Sustainable Grazing
Systems participants claimed changes to their
grazing systems would increase sustainability
and profitability.
n More than 80 per cent of PROGRAZE®
participants predicted grazing and pasture
management changes would improve
profitability and 95 per cent anticipated
improved sustainability.
Sheep nutrition
REACHING $2 BILLION BY 2000
MLA’s investment in nutrition research aimed to: understand
animal nutrition needs and the effectiveness of various options on
production; assess diet quality; and increase pasture utilisation.
Sustainable grazing systems
In 1996, MLA and partners including Land and Water Australia (LWA)
and the Murray Darling Basin Commission developed the five-year
Sustainable Grazing Systems (SGS) program to address declining
pasture productivity and sustainability in southern Australia’s high
rainfall zone. The SGS program trained and entrusted respected
producers to direct R&D addressing local issues.
Investment: $2 million per year, with total funding of $10 million
over five years (1996 to 2001)*
Outputs:
n
Experiment model to investigate interaction between production
and sustainability variables
n
Regional producer network
n
SGS National Farm Walks (attracted 6,400 producers and
involved 135 sites)
Outcomes:
n
Up to 8,000 producers adopted changes to grazing systems
following SGS participation1
Impacts:
n
81 per cent and 85 per cent of SGS participants said changes
would increase profitability and sustainability, respectively1
REACHING $2.8 BILLION BY 2005
PROGRAZE®
Developed by NSW Agriculture to teach producers pasture and
animal assessment for grazing management, PROGRAZE® is now
delivered through MLA’s EDGEnetwork® program.
Investment: Actual cost since 1999 $1 million*
Outputs: More than 11,000 producers have participated in a
PROGRAZE® workshop1
Outcomes:
“Grain & Graze® gave us
the confidence to graze
two 38-hectare Gairdner
barley paddocks last year
before the start of stem
elongation, helping to fill the winter feed
gap without compromising grain yield.”
– Nathan Scott, Peel Agriculture livestock manager
Grain & Graze®
A joint initiative between MLA, the Grains Research &
Development Corporation (GRDC), AWI and LWA, the Grain
& Graze® research and extension program (2003 to 2008)
encouraged producers to implement management changes to
increase crop, pasture and animal production while enhancing
natural resource condition.
Investment: $6.3 million over five years from 2003*
Outputs:
n
More than 8,000 producers were actively engaged in
Grain & Graze® program activities2
n
More than 5,000 producers trialled Grain & Graze®
recommended practices2
n
More than 200 publications, products and information tools2
Outcomes:
n
More than 3,200 producers adopted recommended practices2
n
800 participants improved farming practices on
Grain & Graze® advice1
n
New enterprises or production processes introduced to existing
farming systems
Impacts:
n
Average nine per cent profit increase from adoption of Grain &
Graze® recommended practices1
n
Five per cent crop production profitability increase
n
Improved climate risk management and environmental benefits
EverGraze®
A joint initiative of MLA and the former Cooperative Research
Centre for Plant-based Management of Dryland Salinity, the
EverGraze® program researches new livestock systems by
combining improved animal genetics and management approaches
with different perennial pastures to meet year-round nutritional
needs and reduce groundwater recharge to control salinity.
Investment: $3.4 million over five years since 2004*
Outputs:
n
New perennial based grazing systems knowledge transferred to
4,243 producers and 2,429 advisors
n
41 per cent of participants have adopted rotational grazing1
n
58 demonstration sites in conjunction with regional natural
resource management bodies
n
62 per cent of participants changed grazing practices1
n
16 producer publications; EverGraze® database (2,450 members)
n
48 per cent of participants changed pasture management1
Outcomes:
Impacts:
n
Improved knowledge to extend growing seasons with new
pastures and improve continuity of lamb supply
n
Increased profitability predicted by 86 per cent of participants1
n
Improved pasture base sustainability predicted by 95 per cent
of participants1
1
MLA 2008, Economic Evaluation of Lamb Production RD&E Investment 1990/91
– 2007/08
2
Price, R 2008, G & G Program Report
n
Stimulation of new research to improve lamb production efficiency
* MLA investment only (nominal dollars)
8
MEAT & LIVESTOCK AUSTRALIA
SHEEP MANAGEMENT AND ADOPTION
n EDGEnetwork® participants reported a
four-to-five per cent increase in short-term
productivity and long-term profitability increases
of up to 12 per cent.
n MLA’s ‘Prime Time’ campaign was
instrumental in boosting prime lamb production
to meet export demand for sheepmeat and
influenced a 13 per cent increase in lamb
numbers.
Sheep management and adoption
MLA’s investment in management has focused on facilitating
industry change and improving production and marketing through
information materials, workshops, forums, on-farm trials and
demonstration sites. Participants rated MLA’s R&D communication
and extension programs as very positive (71 per cent), with 54 per
cent reporting increased profitability or reduced cost of production.1
“As a result of attending a
Prime Time forum, we are
aiming for higher weaning
weights, improved
paddock management and
finishing lambs earlier.”
– Lachie Stewart, SA prime lamb producer
REACHING $2.8 BILLION BY 2005
Prime Time
Developed in conjunction with the Sheepmeat Council of Australia,
the Sheep Industry CRC and private sector partners, MLA’s ‘Prime
Time’ campaign was launched in 2003 and aimed to meet growing
export demand by empowering producers to take advantage
of proven breeding, feeding and management technologies that
required little or no cost and would accelerate productivity.
REACHING $2 BILLION BY 2000
Investment: $1.6 million over three years since 2003*
Value-based marketing
Outputs:
Value-based marketing was used to support producers in
understanding: how to produce what the market wants; how
to understand price grids and utilise forward contracts; and the
advantage of selling lambs through value-based marketing systems.
n
60 Prime Time producer forums across Australia (2003 to 2005)
Investment: $4.4 million*
Outcomes:
Outputs:
n
67 per cent of producers who participated in Prime Time or
Making More from Merinos changed management practices3
n
Prime Lamb Key Program (1989 to 1994) – showed producers
how to produce and market elite lambs to specification
n
Lamb Consistency Key Program (1995 to 1999) – focused on
consistency of quantity and quality
Outcomes:
n
Promotion of lamb industry developments along the supply chain
n
Evaluation and commercialisation of objective online carcase
measurement systems
n
34 per cent increase in the proportion of lambs supplied using
value-based marketing systems between 1994 and 2004 (40
per cent)1
n
Prime Time information distributed to about 18,000 producers2
n
About 7,000 producers engaged with at least one Prime Time
activity2
n
Mixed farmers’ use of LAMBPLAN® ASBVs rose from nine
per cent to 42 per cent, use of Merino Genetic Services
ASBVs jumped from six per cent to 28 per cent, and use of
PROGRAZE® principles doubled from six per cent to 12 per
cent3
n
75 per cent of mixed farmers affirmed higher sheep productivity
could be achieved without affecting grain production3
Impacts:
n
16 per cent increase in ewes mated to produce Merino lambs3
n
More even lamb turn-off throughout the year
n
Forecast five per cent increase in ewes joined to produce prime
lambs3
Impacts:
n
13 per cent increase in estimated lamb numbers3
n
A higher proportion of lamb product met market and consumer
requirements
n
Up to 25 per cent increase in expected lamb sales3
EDGEnetwork®
Developed in 1998 in partnership with the Victorian Department
of Natural Resources and Environment, the EDGEnetwork®
extension program enables MLA to communicate R&D outcomes
to assist on-farm decision-making and technology adoption.
Investment: $3.5 million since 1999 (net of income received from
EDGEnetwork® course participants)*
Sheep flock and lamb production
500
0
07-08
06-07
05-06
04-05
03-04
02-03
Financial year
Lamb production
01-02
00-01
99-00
98-99
97-98
96-97
95-96
Sheep flock
94-95
93-94
92-93
MEAT & LIVESTOCK AUSTRALIA
91-92
n
Long-term profitability increases up to 12 per cent2
50
100
90-91
n
Four-to-five per cent increase in short-term productivity2
100
200
®
200
150
300
Outcomes:
Impacts:
million sheep and lambs
400
Outputs: More than 6,000 producers have participated in
EDGEnetwork® workshops
n
75 per cent of EDGEnetwork participants have changed at
least one management practice (increasing pasture production,
stocking rates, natural resource management, business planning)2
'000 tonnes cwt
0
Source: ABS
Axiom Research 2007, Meat & Livestock Australia Awareness & Adoption KPI
Evaluation 2007
1
MLA 2008, Economic Evaluation of Lamb Production RD&E Investment 1990/91
– 2007/08
2
Harris, J & Ryce, C 2005, Outcomes of MLA’s livestock production research and
development, MLA
3
* MLA investment only (nominal dollars)
9
AGGRESSIVE PROMOTION IN THE MARKET PLACE
n The ‘Trim Lamb’ campaign introduced new
cuts and trimming practices to address declining
lamb popularity.
n The ‘We Love Our Lamb’ domestic
marketing campaign positioned lamb as
Australia’s national meat.
n The ‘Easy. Any Day.’ US marketing campaign
positioned lamb as a product that was easy to
prepare to boost consumer appeal.
REINVENT THE PRODUCT
Mother’s Day lamb
promotion in Australia.
GROW MARKETS
Reaching $2 billion by 2000
REINVIGORATE THE DOMESTIC MARKET
Reaching $2.8 billion by 2005
• Fresh Australian Range Lamb (US)
• Trim Lamb (domestic)
• Fresh Australian Premium Lamb • Easy. Any Day. (US)
• We Love Our Lamb (domestic)
US LAMB MARKETING
Market research, quality assurance, promotion
– commitment to consistent supply of large, lean lamb
Fresh Australian Premium Lamb (FAPL)
– Australian lamb reputation as ‘premium’ meat
Fresh Australian Range Lamb (FARL) program
– confidence in Australian lamb industry; increased lamb
export value and share of US lamb imports
Australian Lamb brand
– country of origin mark; reinforcement of Australian lamb attributes
arket access program
M
– removal of barriers; industry protection; improved access to
international markets
Easy. Any Day. campaign
– lamb repositioned for broader appeal in US
Industry Collaborative Agreement program
– enhanced brand promotion; supply chain loyalty
DOMESTIC LAMB MARKETING
Trim Lamb campaign
– 22 new premium cuts; improved retail presentation
and promotion; lamb repositioned as modern meat option
Product and reputation development
– improved eating quality and nutritional reputation;
increased consumer demand; higher volume sales
Post Trim Lamb product development
– refocus on mainstream cuts; increased ‘family’ market demand;
higher volume sales
We Love Our Lamb campaign
– lamb positioned as Australia’s national meat;
increased demand from younger households; higher volume sales
Aggressive promotion increases
lamb demand and value
The $383 million invested by MLA’s Lamb Marketing program
between 1991 and 2007 has improved lamb quality, satisfied
international taste preferences and differentiated Australian lamb
in export markets. These developments have had a positive
influence on industry and consumer attitudes towards lamb,
contributing to increased demand, higher prices and an additional
$1.43 billion in industry value added†.
Benefits from Lamb Marketing program
(net present value 2007)
Industry investment
via MLA
$383m
Total industry value added
over 25 years*
$1.43b
0
300
600
900
1,200
1,500
Total ($m)
Source: CIE
FAST FINANCIAL FACTS†
Total Lamb Marketing program
n
Industry investment via MLA 1991 to 2007:
$383 million
n
Total industry value added over 25 years*:
$860 million - $1.43 billion at the farm gate
The ‘We Love Our Lamb’ campaign positioned lamb as Australia’s
n Benefit-cost ratio: 2.2-3.7:1
lamb in the US to generate broader appeal.
national meat while the ‘Easy. Any Day.’ campaign repositioned
AMLC/MLA marketing support and industry development
initiatives ensured supply continuity that underpinned year-round
consumption in the domestic market and the substantial
growth of Australian lamb exports to the US.
†
All results are net present values in 2007 dollars
* 1990-2015: high and low net present values based on assumptions and sensitivity
analysis on page 4
10
MEAT & LIVESTOCK AUSTRALIA
GROW MARKETS
n Australian lamb exports quadrupled between
1994 and 2007, and now represent 45 per cent
of industry production – up from 15 per cent in
1990.
n Australia has emerged as the world’s largest
exporter of red meat and livestock and the
US remains Australia’s dominant lamb export
destination.
The growth of a dominant lamb
export destination
REACHING $2 BILLION BY 2000: FARL
Strong industry marketing differentiated Australian lamb in export
markets by emphasising Australia’s clean, natural image and
reputation as a reliable supplier of safe, quality meat.
While growing demand in the domestic market was fundamental
to the Australian lamb industry’s revitalisation in the late 1980s,
MLA, SCA and exporters also recognised significant export
potential.
A$million
400
0
Export volume
1
2007
0
2006
80
2005
10
2004
160
2003
20
2002
240
2001
30
2000
320
1999
40
1990
Global diversification/international marketing and market access
are tackled by separate MLA evaluation reports: 2.3 Developing
new markets and products and 1.2 Maintaining and liberalising
access to world meat markets respectively.
'000 tonnes cwt
50
1998
Australian lamb exports have increased four-fold from $A190
million in 1994 to $A823 million in 2007, and represent 45 per
cent of industry production – up from 15 per cent at the beginning
of the past decade.1
Australian lamb exports to the US (1990-2007)
1997
n
falling lamb production in the US and EU.
Since developing the initial strategy to build the US market,
AMLC then MLA have provided ongoing funding and on-ground
personnel who have worked closely with supply chains to support
marketing activities in the US.
1996
n
improved market access – reduced US import restrictions since
2002 and a reduction of tariffs in Japan, China and Taiwan
n
The New Zealand sheepmeat industry focused on the EU market
where it enjoyed preferential access. Small carcase size and
seasonal production restricted its capacity to seize US opportunities.
1995
n
increased production of heavier, leaner meat breed lambs
designed primarily to meet the needs of the US market
n
Surging sheep numbers in Australia triggered concerns about
market prospects for increased sheepmeat production.
1994
Growth in overseas demand for Australian lamb has
predominantly been driven by:
n
The US lamb industry was in terminal decline due to production
constraints and failure to meet customer preferences.
1993
Australia is the world’s largest exporter of red meat and livestock,
exporting to more than 100 countries. The US remains Australia’s
dominant lamb export destination.
Targeted efforts to build a substantial market for Australian lamb
in the US took advantage of market conditions:
1992
Under the AMLC co-funded Market Access program, MLA
worked with government and industry to remove barriers to key
international markets and defend the industry against economic
and technical issues threatening existing access conditions (see
evaluation brochure 1.2 Maintaining and liberalising access to
world meat markets).
Traditional European lamb eating markets were restricted by tariff
rate quotas, however the higher per capita disposable income
and expanding consumer base in the US represented a strong
untapped market.
1991
AMLC then MLA, together with producers and exporters,
developed a strategy to expand lamb sales to the US based on
research and industry consultation that showed US consumers
preferred cuts from large, lean lambs.
Overseas key to vibrant lamb industry
Export FOB value (RHS)
Source: USDA
DAFF volumes, ABS values, MLA forecasts - 2007
“FARL focused on providing a
premium quality product – chilled,
cut, trimmed to minimum basic
specifications and branded only
by accredited Australian exporters.
It kicked off the industry’s strong
growth of value-added, fresh lamb
exports to the US.”
MEAT & LIVESTOCK AUSTRALIA
– Craig and Neville Newton, Southern Meats
11
US LAMB MARKETING (1990-2007)
n The US lamb marketing program boosted
awareness of Australian lamb’s quality and
safety attributes.
n A heightened commitment from producers
and processors to provide more consistent
quality and supply, strengthened Australia’s
market share.
In-store tasting and education is a key tactic to increase
awareness of Australian lamb in the US.
Marketing lamb to the US
REACHING $2 BILLION BY 2000: FARL
Research informs marketing plan
The 1980s strategy to expand lamb sales to the US was based
on market research and industry consultation that found:
n
US consumers preferred cuts from large, lean lambs but were
unfamiliar with how to cook lamb
n
a lack of retail availability and high prices had limited demand
n
a consistent, regularly available lamb product had a lot of potential
n
retailers required a chilled product.
Recommendations to undertake trade and consumer education
and promotion; implement quality assurance; establish a more
consistent supply; and develop a product tradename were adopted.
The ‘Fresh Australian Range Lamb’ (FARL) program was launched in
1988 to accredit exporters, importers and retailers to use the FARL
quality assurance mark. FARL was a precursor to US-based trade
development, merchandising support and sales growth.
REACHING $2.8 BILLION BY 2005: Easy. Any Day.
Strategy adapts to changing times
Legal advice determined that ‘range’ implied Australian lambs
were raised only on pasture. Grain finishing was not common, but
not all lambs raised for the US were entirely pasture fed. In 2000
the FARL logo was adapted in response to enforcement of US
truth in labelling laws and ‘Premium’ was substituted for ‘Range’.
In 2003, stakeholders claimed the ‘Fresh Australian Premium
Lamb’ (FAPL) brand elevated Australian lamb as an ‘elite’,
expensive product, and a 2004 MLA review concluded that the
FAPL program should enter a new phase.
A new era for US lamb marketing
In 2005 the FAPL logo was replaced with the ‘Australian
lamb’ logo – a country of origin mark that is used in all generic
marketing campaigns. Today the North American program
balances generic marketing and promotion of company brands
through the Industry Collaborative Agreement (ICA) program.
Generic marketing aims to increase consumption by positioning
Australian lamb as an ‘Easy. Any Day.’ meal option, while the ICA
program focuses on growing sales through established channels
with costs split between MLA and suppliers. It promotes loyal
supply chains, builds brands through targeted promotion and
in-store advertising, and fosters business development.
A new tradename/logo was
developed to differentiate Australian
lamb in the US market.
12
Collaboration = market development
The Australian lamb program in the US has historically relied on
collaboration between producers, processors and exporters, the
US trade and AMLC/MLA. Today collaboration is embodied in the
ICA program, whereby exporters and importers consult with MLA
and work with US retailers to market Australian lamb.
US export performance
Australian lamb exports to the US have increased in carcase
weight terms from around 6,000 tonnes in 1990 to about 57,000
tonnes in 2007 – an average annual increase of 14 per cent. Over
this time, the value of lamb exports to the US has increased from
about A$18 million to US$335 million, or an average of 22 per
cent per year. Between 1990 and 2007, Australia’s share of total
US lamb imports grew from 53 per cent to more than 72 per cent.
There was a significant compositional shift in Australian lamb
exports to the US between 1990 and 2007:
n
Chilled lamb accounted for about 44 per cent of total exports in
1990 and exceeded 70 per cent by 2007.
n
Prices for chilled lamb rose between 1990 and 2007, and are
now almost 80 per cent higher than frozen product.
n
The Australian share of the boneless lamb market rose from
11 per cent in 1990 to 26 per cent in 2007.
n
Average free on board (FOB) prices received by exporters
increased from A$3.10 per kilogram in 1990 to $7.43 in 2007 in
nominal terms (almost seven per cent per year on average).
While prices in recent times have been tempered by the
appreciating Australian dollar, a key driver for increased prices in
the US has been the move to chilled product, along with a shift
from a largely carcase-based trade to a cuts-based trade.
Export marketing strategy
boosts confidence
The comprehensive marketing strategy developed by AMLC in
the 1980s attracted attention from distributors and introduced
specifications that established reliable quality standards, giving
potential customers confidence to stock Australian lamb.
Coordinated partnerships between AMLC, and exporters and
importers such as the Australian Lamb Company, Foodcomm
International and Superior, were instrumental in securing access to
prospective US clients and developing the distribution capability to
provide continuity of supply. FARL lamb sales expanded as new retail
chains emerged as a result of cooperation between AMLC staff in
the US and participating exporters.
Under Industry Collaborative Agreements (ICAs), which now
account for about 50 per cent of the US lamb marketing program’s
expenditure, exporters and importers work with collaborating
US retailers to promote consumer awareness of Australian lamb
brands through targeted advertising and promotion.
MEAT & LIVESTOCK AUSTRALIA
REINVIGORATE THE DOMESTIC MARKET
n The new ‘Trim Lamb’ range of premium
cuts drove higher volume and demand among
younger households, and established lamb as
Australia’s national meat.
n Lamb marketing, eating quality improvements
and research confirming red meat’s health
benefits contributed to higher demand and
prices, generating $644 million added value to
the Australian lamb industry.
Domestic lamb consumption and price
16
14
12
10
8
6
4
2
0
kg cwt per person
A¢/kg retail weight 1,400
1,200
1,000
800
600
92
94
consumption
96
98
00
02
retail price
04
06
400
200
0
Source: ABS, DAFF, MLA
Promoting lamb to the
domestic market
REACHING $2 BILLION BY 2000
The $263 million invested by MLA’s Domestic Lamb Marketing
program between 1991 and 2007 introduced consumers to
‘Trim Lamb’ premium cuts, drove higher volume and demand
among younger households, and established lamb as Australia’s
national meat. Domestic marketing activity, together with eating
quality improvements and research that confirmed health benefits
connected to red meat, facilitated retail value-adding and
promotion. This contributed to increased local demand, higher
prices and an additional $644 million in industry value added.†
Domestic lamb marketing undertaken by MLA’s predecessor,
AMLC, from 1991 to 1998 aimed to reposition lamb as a modern
meat option that could compete with other products.
Modernising lamb
Consumer expenditure on lamb 1998-2006:
actual versus predicted
1,800
1,600
1,400
1,200
1,000
800
The new ‘Trim Lamb’ range initially consisted of 14 premium cuts
that were trimmed of fat, boneless and endorsed by the National
Heart Foundation.
Product development continued beyond the initial ‘Trim Lamb’
launch, producing a variety of cuts including the ‘Easy Carve
Lamb Leg’, forequarter entertainer cuts and lamb mince.
600
400
200
1998
1999
Actual sales
†
Product development
‘Trim Lamb’ provided scope for retail prices to rise, allowing
higher margins to flow along the marketing chain. Importantly,
it could be sourced only from lamb 18 kilograms or more with a
fat score of 2 to 3. This weight specification, which represented
45 per cent of total Australian production, was the minimum for
adequate portion size, while the fat specification provided retailers
with a higher yielding, more profitable carcase.
Consumer expenditure ($m)
2,000
0
This strategy involved the development of 22 new lamb cuts,
communication of associated benefits and profit potential to the
retail and food service sectors, and consumer promotion of newlook cuts.
2000
2001
2002
Predicted sales
2003
2004
2005
2006
Source: Industry Demand model
All results are net present values in 2007 dollars
Woolworths welcomes
changes to lamb
MLA’s Lamb Marketing and on-farm programs have significantly
boosted supermarket confidence to market lamb. The signals that
producers are receiving from the domestic marketplace on quality
expectations, coupled with increased export demand, have been
responsible for driving higher carcase quality and meat yields,
and have addressed drought-related issues in many regions of
Australia in a proactive manner.
Woolworths Business Manager Lamb, Robert Carratt, says that
the new confidence in consistent lamb supply and increased
meat quality has allowed a wider range of value-added lamb to be
sold in supermarkets.
“Lamb is a very significant component
of our business and we are excited
about the breadth of opportunities
that exist. The joint initiatives of
Woolworths and MLA are important
to maintain and drive further sales
and profitability.”
– Robert Carratt, Business Manager Lamb, Woolworths Supermarkets
“The advent of products such as the butterfly marinated lamb
roast, corned lamb silverside and oven-ready roast lamb are
ensuring that lamb remains contemporary and delivers what we
believe our customers want,” Mr Carratt says.
MEAT & LIVESTOCK AUSTRALIA
13
REINVIGORATE THE DOMESTIC MARKET (1990-2000)
n Domestic marketing stimulated interest and
built consumer loyalty by improving product
quality and cut variety year-round.
n Improvements in eating quality inspired a
greater commitment to value-adding at retail
level, driving higher profits.
“Since we introduced the ‘Trim Lamb’
products in 1992, demand has
been unprecedented and our profit
margins have increased.”
– Brendan Watts, Melbourne butcher
Retail offer improves after
a shaky start
Most independent retail butchers did not support or offer ‘Trim
Lamb’ following its initial launch due to factors including:
n
their failure to understand that ‘Trim Lamb’ was not a
replacement for traditional lamb
n
their inability to appreciate the product’s potential profitability
n
higher production costs linked to the length of time required to
bone out carcases and fabricate cuts
n
perceptions that consumers were unwilling to pay a premium
for ‘Trim Lamb’.
Conversely, supermarkets recognised that stocking shelf-ready
vacuum-packed or modified atmosphere packaged (MAP) ‘Trim
Lamb’ products was an opportunity to further meet consumer
needs.
Effective communication and capacity building gradually wooed
independent butchers. The ‘Trim Lamb Selected Butcher’
campaign, launched in 1993, was a business-building program
offered exclusively to retailers who supported ‘Trim Lamb’, while
the ‘New Trim Lamb’ test market program, launched in 1996,
provided training in fabrication, merchandising and pricing.
Foodservice
The foodservice sector responded positively to ‘Trim Lamb’,
quickly recognising the product’s potential for portion control,
minimal plate wastage, shorter preparation time and easier
cooking.
REACHING $2 BILLION BY 2000: Trim Lamb
Ads show consumers lamb has ‘changed its ways’
A major advertising program supported lamb product
development throughout the 1990s. The 1991 launch introduced
the ‘dog in the window’ concept, which communicated that ‘Trim
Lamb’ had no fat or bone. Tracking showed that 85 per cent of
consumers perceived ‘Trim Lamb’ to be low in fat; 70 per cent
believed it was healthy and nutritious; and 66 per cent regarded it
as easy to prepare.
This initiative evolved to support activities in the foodservice
sector from 1993, and to launch the ‘Easy Carve Lamb Leg’
family meal in 1994. A new-look campaign, ‘Lamb – the
Multicultural Meal’, was also introduced in 1994 and focused
on new cuts, flavours and ease of preparation in the context of
international cuisine such as souvlaki and tandoori.
The ‘Trim Lamb’ campaign was the keystone of lamb advertising
throughout most of Australia until 1998. In Victoria, advertising
supported the ‘New Trim Lamb’ test market from 1997.
Key foodservice wholesalers reported significant increases in ‘Trim
Lamb’ sales – some exceeding 2,000 kilograms per week.
The ‘dog in the window’
advertisement effectively
communicated that ‘Trim Lamb’
had no fat or bone.
14
MEAT & LIVESTOCK AUSTRALIA
REINVIGORATE THE DOMESTIC MARKET (2000-2007)
Five principles of lamb marketing
The challenge to position lamb as a relevant meal choice for contemporary
Australians prompted the development of five marketing principles which are
the backbone of the ‘We Love Our Lamb’ campaign:
1. Lamb needs a distinctive voice.
2. Lamb needs year-round activity.
3. The volume opportunity is with mainstream families.
4. The volume is with mainstream cuts.
5. Integration of all activity is vital.
Modified plan boosts lamb volume
and demand
REACHING $2.8 BILLION BY 2005:
We Love Our Lamb
Taking lamb to the masses
Roy Morgan research conducted for MLA in 1999 revealed lamb’s
staple buyers were older households. The findings presented a
problem for the lamb industry going forward, and the strategy
was modified to drive increased lamb volume and demand among
mainstream consumers from 1999.
Promotional activity – principles in action
The mission to target families with lamb chops and roasts yearround was tackled using marketing initiatives to drive demand,
and tactical spikes to attract non-routine buyers and grow the
customer base.
Brand work
Brand activity expanded lamb’s core customer base by targeting
younger household groups with highly focused communications.
Under the ‘We Love Our Lamb’ campaign, a new ‘Veg Goth’
commercial was directed at families with teenage children while
a ‘Hands’ commercial targeted families with young children. The
‘Stuart’ commercial hinted that lamb enthusiasts would invite an
imaginary friend to dinner to guarantee an extra serve. The ad
achieved high awareness among the target family audience.
Tactical work
Leveraging events on the Australian calendar to seize tactical
opportunities for lamb also proved a successful approach.
Australia Day
Australia Day has become a major springboard for the lamb
message since 2000, with television campaigns including the
‘Lamb’s Australia’s Fare’ parody of the national anthem and
commercials featuring outspoken personality Sam Kekovich
helping to position lamb as an iconic Australian meal.
impact, with 79 per cent definitely remembering the brand
advertised (against a benchmark average of 62 per cent).3
Mother’s Day
MLA’s Mother’s Day crusade has given lamb another hook in
the calendar, with recognisable campaigns such as ‘Dog in the
window’ pitching a lamb roast cooked by the family as “the
perfect gift for Mum”.
The ‘Lâmb’ television commercial – a take on women’s fragrance
advertising introduced in May 2006 – generated increased top-ofmind awareness of lamb and helped to boost servings during the
period. Brand recognition associated with this television commercial
was also high, with 90 per cent of viewers linking it to lamb.4
Other tactical opportunities
News events have also sparked tactical opportunities. MLA
produced newspaper advertisements and butcher posters linked to
the 2004 Federal Election, the Sydney and Athens Olympic Games,
and the marriage breakup of Tom Cruise and Nicole Kidman.
Raising the retail lamb offer
Retail lamb activities have predominantly centred on increasing
adoption of consumer campaigns and point-of-sale installation,
with initiatives such as the Australia Day campaign boosting retail
awareness and contributing to positive sales reports.
Improvements in eating quality have enabled retailers to
dramatically increase the number of value-added product
launches in major supermarket groups. Smaller outlets have also
displayed a greater commitment to value-adding, with items such
as barbecue shoulder cuts and multicultural flavoured lines driving
higher prices and profits.
Retailer confidence in lamb is strong across all channels and
support for the lamb marketing campaign has not waned despite
soaring prices for high-yielding carcases.
Lamb marketing triggers demand upsurge
Demand index
100
95
90
Leading market research agency Millward Brown concluded
the ads usually attract more than 50 per cent recognition using
low media spend, with 89 per cent of consumers definitely
remembering the brand advertised as lamb against a benchmark
average of 62 per cent. The ads successfully communicate
“Australia’s national meat” to 90 per cent of consumers, and lamb
has surfaced as the meat most associated with the declaration “Is
loved by Australians”1 (increasing from 55 per cent2 to 74 per cent
between 2001 and 2008).
80
70
65
60
55
2004
2003
2002
2001
2000
1999
1998
1997
1996
1995
1994
1993
1992
1991
1990
1989
1988
1987
1986
1985
1984
1983
1982
1981
1980
MEAT & LIVESTOCK AUSTRALIA
Trim Lamb
75
Spring
Traditionally a period for peak supply and brand communication,
Spring has emerged as a strong tactical opportunity for MLA.
The ‘Falling in Lamb’ commercial (2007 and 2008) – a romantic
comedy spoof in which two people fell in love over lamb – was
measured by Millward Brown as well above average for consumer
‘We Love Our Lamb’
campaign launch
85
Source: NLRS, AFFA, ABS, ABARE, MLA
1
Millward Brown 2008, October 07-January 08 Tracking Presentation
2
The Leading Edge 2002, Lamb Tracking 2002
3
Millward Brown 2007, July-September 07 Tracking Presentation
4
The Leading Edge 2006, Advertising Evaluation–Lâmb
15
LESSONS LEARNED
n Market and product research, demand
and supply integration, and R&D extension
underpinned lamb’s reinvention.
n Industry collaboration influenced eating
quality improvements, value-adding and
marketing to reinvigorate the domestic market.
n Government and industry engagement
facilitated international market access essential
to export growth.
“The collaboration
between AMLC/
MLA, exporters and
importers represented
a coordinated approach
to marketing that was
instrumental to US
market access.” – Gary Castricum, Castricum Brothers
Lessons in reinvention, reinvigoration and growth
Lamb production over time – industry evolution & revolution
kt cwe
600
$ billion
3.0
KEY DEMAND INITIATIVES
WLOL/FAPL
500
Trim Lamb
& FARL
400
2.5
S201 Case
ICA/Easy. Any Day.
2.0
Consumer
focus
300
200
Product
transformation
100
1.5
Supply chain
integration
Prime Time
1.0
VBM & new
product development
0.5
KEY SUPPLY INITIATIVES
0
2007-08
2006-07
2005-06
2004-05
2003-04
2002-03
2001-02
2000-01
1999-00
1998-99
1997-98
1996-97
1995-96
1994-95
1993-94
1992-93
1991-92
1990-91
Lamb production
0
Lamb value
The chart above tracks the transition of the lamb industry from reinventing the product to reinvigorating the market, growth and global expansion towards
market diversification. Each stage of this journey has been facilitated by key industry and MLA initiatives that have integrated emerging market opportunities with
Source: ABS, DAFF, MLA estimates
the development of an export-oriented specialist prime lamb industry.
REACHING $2 BILLION BY 2000
REACHING $2.8 BILLION BY 2005
Reinvent the product
Reinvent the product
Market research identified domestic and international preferences,
while product research equipped the industry to meet requirements
for large, lean lambs; move to dedicated lamb processing; and
develop trim, versatile cuts. Demand and supply integration was
fundamental to industry revival, however this also rendered it difficult
to separate each stakeholder group’s contribution to documented
outcomes. Collaboration with DPIs was significant; apart from
facilitating research and adoption of R&D outputs, state DPIs
maintained research facilities critical to delivery of R&D outcomes.
R&D extension enabled MLA to maximise outcomes from its on-farm
investment, encouraging adoption of new technologies and a
production shift towards large, lean lambs. This approach was key to
ensuring the development of a specialist industry.
Reinvigorate the domestic market
Transforming retail supply from lamb carcases to cuts and
generating consumer demand required collaboration between
AMLC/MLA and industry: on-farm and retail. Engagement to
communicate domestic expectations encouraged producers to
turn out higher carcase quality and meat yields, which influenced
value-added retail products. The ‘Trim Lamb’ campaign
introduced new cuts and trimming practices to address the lamb
popularity slump. Re-focusing on mainstream cuts to renew
appeal within the family market, MLA discovered that valueadding to drive retail interest required groundwork to enhance
eating quality and substantiate nutritional benefits.
Grow markets
Engagement with government and industry was necessary to
overcome barriers, economic and technical issues impeding
international market access. AMLC/MLA marketing and
distribution support helped to sustain supply and export growth.
Reinvigorate the domestic market
The Australian lamb industry’s turnaround was dependent on
comprehensive marketing to popularise lamb as Australia’s
national meat. Leveraging media and community interest and
seizing tactical promotion opportunities was a valuable lesson
and MLA has continued to build on this approach. Eating quality
improvements attracted retailer interest and motivated valueadded products attracting higher prices. Focusing on the core
product’s potential and cementing retailer confidence in lamb has
ensured ongoing marketing support.
Grow markets
The use of ‘Premium’ in the ‘Fresh Australian Premium Lamb’ (FAPL)
brand typecast lamb as an elite product in the US. The ‘Easy. Any
Day.’ marketing campaign repositioned lamb to appeal to a broader
consumer base. Industry collaborative agreements (ICAs) – 50:50
funding between MLA and private companies – were instrumental in
enhancing generic and private brand lamb promotion in the US.
Level 1, 165 Walker St,
North Sydney NSW 2060
AUSTRALIA
Tel +61 2 9463 9333
Fax +61 2 9463 9393
www.mla.com.au